The euro and yen are gaining momentum in the global foreign exchange market, emerging as key challengers to the U.S. dollar, while the South Korean won continues to weaken. Analysts attribute the won’s sluggish performance to prolonged political uncertainty in South Korea, which has heightened concerns over economic instability. They believe the currency will stabilize only after the Constitutional Court rules on President Yoon Suk-yeol’s impeachment and the government advances its supplementary budget plan.
According to financial data provider Investing.com, the euro-dollar exchange rate closed at $1.0832 per euro on Mar. 7, surpassing the $1.08 threshold for the first time in nearly four months. The euro continued to appreciate, peaking at $1.09 on Mar. 11 before retreating to the $1.08 range on Mar. 14.
The euro had previously weakened around the time of U.S. President Donald Trump’s election victory, hitting $1.0216 in January and raising concerns over potential euro-dollar parity (1 euro = 1 dollar). However, the currency has since rebounded, bolstered by shifts in the European Central Bank’s monetary policy and large-scale economic stimulus measures in Germany.
The Japanese yen has also been strengthening this year. After plunging due to the Bank of Japan’s prolonged low-interest-rate policy, the yen began to recover amid growing expectations of rate hikes.
Despite the euro and yen’s gains, the won remains under pressure. After surpassing 1,400 won per dollar following the declaration of martial law in December, the won-dollar exchange rate has climbed to the upper 1,450 range. On Mar. 1, the rate closed at 1,458.2 won per dollar in weekly trading (as of 3:30 p.m.), nearing the 1,460 level. By Mar. 14, the won settled at 1,453.8 per dollar, holding above the 1,450 mark.
The won’s persistent weakness is primarily driven by ongoing domestic political instability, which has clouded the government’s economic policy direction. Market uncertainty, coupled with concerns over a global economic slowdown, has dampened investor sentiment toward the won.
Adding to the pressure, a potential second Trump administration could implement aggressive tariff policies, potentially slowing South Korea’s export growth and further weighing on the currency. The Bank of Korea projects the country’s current account surplus to reach $75 billion this year, down from $99 billion in 2024. The shrinking dollar supply is expected to exacerbate downward pressure on the won.
Park Sang-hyun, an analyst at iM Securities, said, “The recent depreciation of the won is largely due to continued political instability, compounded by rising corporate credit concerns following discount retailer Homeplus’ corporate restructuring application. These factors have increased downside risks for the economy.” He added that resolving political uncertainty and implementing stimulus measures, such as a supplementary budget, are necessary steps toward stabilizing the won.
